Children swimming in Guatemala’s Chixoy River. Photo by Bert Hanson New Hope for Environmental Justice in IFI Projects A Factsheet on the Opportunities Provided by the 2014 US Budget Bill

Introduction ou may be fighting a destructive dam or a mining project in a rainforest that the YWorld Bank is considering for support. You may be supporting poor communities that have lost their lands and livelihoods to a project funded by another international financial institution (IFI). You may recently have filed a complaint with the World Bank Inspection Panel. Or you may be campaigning to protect social services from cuts under an IMF aus- terity program. In all these cases, you have now found support in a bill passed by the US Congress. This factsheet tells you more about the topic.

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International Rivers | 2150 Allston Way, Suite 300, Berkeley, CA 94704 | Tel: + 1 510 848 1155 | internationalrivers.org MARCH 2014 The US Congress passed its budget bill for 2014 in ■■ The US will oppose any IFI support for large-scale log- January. In this bill Congress has set strong priorities for ging or other extractive activities in primary tropical US policy toward the IFIs, including addressing human forests. rights violations and environmental destruction in IFI ■■ The US government will oppose any IFI support for projects. Specifically, it instructs the US representatives at large hydropower dams. the World Bank and other institutions to oppose logging projects in primary tropical forests and the construction of Because these provisions are part of the 2014 budget bill, large dams, and to support independent evaluations and they will have to be explicitly maintained or modified in effective accountability mechanisms. The bill also supports next year’s budget bill, or they will expire at the end of the social services spending under IMF programs, and calls for current fiscal year on September 30, 2014. Extending the US representatives to seek compensation for the victims of language in next year’s budget bill is an important advoca- human rights abuses in IFI projects. cy target for NGOs. This factsheet introduces the provisions of the budget bill You will find the exact language on these topics in the that are important for NGOs working on IFIs and their annex at the end of this factsheet. projects, and presents ideas on how civil society groups can The US is one of many member states of internatio- 1 use them in their campaigns. nal financial institutions. Unlike in the UN system, the members of IFIs don’t have equal voting rights. Their The US budget bill voting power depends on the financial contributions to On January 17 President Obama signed the budget for the these institutions. The US is the biggest contributor to IFIs US government for the remainder of the 2014 financial and controls 5-30 percent of their voting rights. year into law. The budget sets the level of US financial commitments to the IFIs. In addition, as it is often the The budget bill covers the role of the US in the following case, the lengthy bill (which runs to 1582 pages) also sets IFIs (with the respective share of the voting rights): priorities for the US role in the IFIs and places conditions ■■ the World Bank (with US shares of 15.3% at the on how the funds should be spent. IBRD, 10.5% at IDA and 22% at IFC); The budget bill includes the following provisions on inter- ■■ the Inter-American Development Bank and the Inter- national financial institutions: American Investment Corporation (with shares of 30% in each); ■■ The US will not fund any IFIs which don’t require independent evaluations of all their projects, including ■■ the International Monetary Fund (16.8%); regarding their impacts on poverty reduction and equi- ■■ the Asian Development Bank and the Asian table economic growth. Development Fund (with shares of 12.8% in each); ■ ■ The US will oppose IMF programs that require poor ■■ the European Bank for Reconstruction and people to pay user fees for primary education and pri- Development (10.1%); mary healthcare. ■■ the African Development Bank (6.5%) and the African ■■ The US will oppose IMF programs that stop heavily Development Fund (5.4%); indebted poor countries from promoting spending for education, healthcare, agriculture, food security and ■■ and the US-Mexican North American Development other safety nets. Bank. ■■ The US will try to ensure that IFIs respond to the Analysis findings of their accountability mechanisms by pro- Many people have expressed surprise that the US Congress viding redress to victims of human rights violations, has passed such strong provisions on IFIs. Yet while including forced displacement, in their projects. Congress doesn’t have a strong track record on climate change and many other environmental issues, it has sup- ■■ The US requests progress reports from the World Bank ported environmental reforms and strengthened transparen- and the IDB on the steps undertaken to implement a cy at the World Bank and other IFIs for several decades. reparations plan for the communities affected by the Senator Patrick Leahy, a Democrat from Vermont who Chixoy Dam massacres in Guatemala. sponsored the IFI provisions in the budget bill, has strongly ■■ The US also requests progress reports from the World supported environmental reforms and justice for the vic- Bank on redress provided to the displaced communities tims of human rights abuses for a long time. of Boeung Kak Lake in Cambodia. The budget bill influences US policy towards the IFIs. It ■■ The US will oppose any IFI activities that directly or does not directly impose conditions on these institutions or indirectly involve forced evictions in Ethiopia. on other governments, but rather provides guidance or ins- 1 Note, this document is not meant to be a legal interpretation of the tructions to responsible US agencies and executive direc- budget bill or any other U.S. law related to the IFIs, and should not tors that implement US policy within these institutions. be used as such. The IFI provisions came about in response to the concerns

2 New Hope for Environmental Justice in IFI Projects

that civil society groups have raised for many years, and supports these concerns. It is now up to civil society groups to use the bill to strengthen their own campaigns. Further information The IFIs did not comment about the topic in public. General information: Treasury officials assured NGOs that they would always act in accordance with the law, but have so far not offered ■■ You will find the text of the 2014 US budget any details on how exactly they plan to implement the bill. bill at http://1.usa.gov/1ePDf7O . Strong interest and involvement from civil society in the US and in developing countries will help ensure an effec- ■■ You will find moreinformation about the budget tive implementation of the bill in spirit and in letter. bill at http://bit.ly/BudgetBillFacts ■ Even if US representatives actively oppose destructive ■ You will find contact information for World projects and push for stronger accountability mechanisms, Bank executive directors at www.bicusa.org/ed the IFIs can choose to simply ignore them. NGOs need to Large dams: monitor the projects that are covered under the budget bill and come to a vote in IFIs before September 2014. They ■■ International Rivers is monitoring large dams in need to educate members of Congress about how the bud- the IFI pipelines. Visit www.internationalrivers. get bill is being implemented. International Rivers is doing org/node/3982 or contact zachary@ this for large dams, and other NGOs are monitoring other internationalrivers.org. types of projects (see the box on further information). ■■ International Rivers also supports the survivors If the World Bank or other IFIs simply ignore the bill’s of the Chixoy massacres. Visit www.interna- provisions, it is up to Congress to include stronger mea- tionalrivers.org/node/2287 or contact monti@ sures in the 2015 budget bill. This may include reducing internationalrivers.org. US contributions to IFIs that are not prepared to reform, and shifting resources to institutions that are serious about Logging projects: protecting human rights and the environment. ■■ Greenpeace is monitoring logging projects, including in IFIs. Contact susanne.breitkopf@ New opportunities for civil society greenpeace.org Here are some suggestions on how you can use the bill to support your campaigns. You can find the contact infor- Accountability mechanisms: mation of NGOs that can support you in the box on the ■■ The Center for International Environmental Law right. and Accountability Counsel are monitoring ■■ Draw attention to your campaigns against IFI logging the role of accountability mechanisms at the or large dam projects by highlighting that the US gov- IFIs. Contact [email protected] or komala@ ernment has been instructed to support your position. accountabilitycounsel.org. ■■ Inform the US executive directors in the IFIs which Ethiopia projects: are promoting the projects you oppose about your spe- cific concerns, and ask that they raise these concerns ■■ The Oakland Institute monitors projects that when they explain their position within the IFIs. cause displacement in Ethiopia. Contact [email protected]. ■■ If you have filed a case with the World Bank Inspection Panel or the accountability mechanism of another IFI, request strong remedial action by referring to the provisions in the budget bill and by asking the ment to compensate the victims of human rights abus- US representatives in the institutions to support your es, and ask the IFIs involved and the US representative request. in this IFI to support such compensation.

■■ Insist that IFIs commission evaluations of IFI projects ■■ Document the response of the World Bank or other you are concerned about by independent third parties. IFIs to your requests, and share this information with Request to see the findings of any independent evalu- interested members of the US Congress. Write to ations that have been carried out about the project. members of Congress and ask them to support stronger Point out that the budget bill supports this request, and action against unresponsive IFIs in future bills. ask the US representative in the IFI that is involved to support your request. ■■ Inform the NGOs listed in the table below about your ■■ If you are working to address an unresolved legacy of efforts on dams, accountability mechanisms and other human rights abuses (including involuntary resettle- issues related to the budget bill. These NGOs can share ment) in an IFI project, use the Chixoy case in the contact information for interested members of Guatemala as a precedent case. Advocate for an agree- Congress with you.

3 Annex: Excerpts from the US budget bill for 2014 Independent evaluations other appropriate redress to individuals and communities “None of the funds appropriated under title V of this Act that suffer violations of human rights, including forced should be made as payment to any international financial displacement, resulting from any loan, grant, strategy or institution unless the Secretary of the Treasury certifies to policy of such institution.” (p. 1240) the Committees on Appropriations that such institution has a policy and practice of requiring independent, outside Reparations for Chixoy Dam massacres evaluations of each project and program loan or grant and “The Secretary of the Treasury shall direct the United significant analytical, non-lending activity, and the impact States executive directors of the World Bank and the of such loan, grant, or activity on achieving the institu- Inter-American Development Bank to report to the tion’s goals, including reducing poverty and promoting Committees on Appropriations not later than 30 days equitable economic growth, consistent with effective safe- after enactment of this Act and every 90 days thereafter guards.” (p. 1238) until September 30, 2014, on the steps being taken by such institutions to support implementation of the April User fees for primary education and healthcare 2010 Reparations Plan for Damages Suffered by the “The Secretary of the Treasury shall instruct the United Communities Affected by the Construction of the Chixoy States executive director of each international financial Hydroelectric Dam in Guatemala.” (p. 1240) institution to oppose any loan, grant, strategy, or policy of such institution that would require user fees or service Ethiopia charges on poor people for primary education or primary “The Secretary of the Treasury shall instruct the United healthcare, including maternal and child health, and the States executive director of each international financial insti- prevention, care and treatment of HIV/AIDS, malaria, and tution to oppose financing for any activities that directly or tuberculosis in connection with such institution’s financing indirectly involve forced evictions in Ethiopia.” (p. 1296) programs.” (p. 1239) No support for industrial scale logging Government spending on healthcare, education, “The Secretary of the Treasury or the Secretary of State, agriculture and food security as appropriate, shall instruct the United States executive “The Secretary of the Treasury shall instruct the United director of each international financial institution and the States Executive Director of the International Monetary United States representatives to all forest-related multilate- Fund (IMF) to use the voice and vote of the United ral financing mechanisms and processes that it is the policy States to oppose any loan, project, agreement, memoran- of the United States to vote against any financing to sup- dum, instrument, plan, or other program of the IMF to a port or promote the expansion of industrial scale logging Heavily Indebted Poor Country that imposes budget caps or any other industrial scale extractive activity into areas or restraints that do not allow the maintenance of or an that were primary/intact tropical forest as of December 30, increase in governmental spending on healthcare or educa- 2013.” (p. 1361) tion; and to promote government spending on healthcare, education, agriculture and food security, or other critical No support for large dams safety net programs in all of the IMF’s activities with res- “The Secretary of the Treasury shall instruct the United pect to Heavily Indebted Poor Countries.” (pp. 1239f.) States executive director of each international financial ins- titution that it is the policy of the United States to oppose Compensation for human rights violations any loan, grant, strategy or policy of such institution to “The Secretary of the Treasury shall instruct the United support the construction of any large hydroelectric dam (as States executive director of each international financial defined in ‘‘Dams and Development: A New Framework institution to seek to ensure that each such institution res- for Decision-Making,’’ World Commission on Dams ponds to the findings and recommendations of its accoun- (November 2000)).” (pp. 1361f.) tability mechanisms by providing just compensation or

New Hope for Environmental Justice in IFI Projects Published by AIDA and International Rivers Contact: International Rivers March 2014 2150 Allston Way Written by Peter Bosshard Berkeley, CA 94704, USA Designed by Design Action www.internationalrivers.org

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